Protecting Pensions
CTA has been educating lawmakers that the budget reduction package they approved does not include hold-harmless guarantees for the State Teachers' Retirement System (STRS).
At issue is the package's provision that allows the state to skip this year's $500 million contribution to the STRS Supplemental Benefit Maintenance Account. Many lawmakers voted for the deferral thinking that the measure included guarantees that the state would pay the funds back - with a fair rate of interest - when the crisis had passed.
CTA is discussing with both the governor and lawmakers the need to guarantee the repayment. The funds going into STRS are used to underwrite the pension purchasing power guarantee that protects retirees from having their payments significantly eroded by inflation. Currently, retirees know that their pensions will always have at least 80% of their original purchasing power.
STRS officials say the deferral doesn't put the current benefits at risk, but the lack of a guaranteed repayment plan will make it more difficult to boost the pension protection above the 80% level.
CTA and the STRS are also considering their legal options. CTA has in recent years won a number of lawsuits that make it clear the state is required to make payments due to the teachers' pension system.
CTA Members:
Contact your state Senators and Assembly Members and urge them to approve legislation that will create a guaranteed payback plan for the $500 million deferral of funds due to the STRS benefit maintenance account.